Credit: REUTERS/DADO RUVICAug 25 (Reuters) - Citibank's preliminary estimate of month-end FX rebalancing flows points to a net USD selling need on Monday, Aug. 31.
All G10 equity markets are showing gains in August, with the MSCI US index among the top performers at 4%, although behind Japanese equities at 7%.
Citibank say this relative outperformance of US assets has likely left foreign investors under-hedged, giving a new USD sell signal to increase hedges.
Good performance of Japanese assets means that the sell USD/JPY signal is amongst the weakest this month, according to Citibank, while the signal to buy GBP/USD is amongst the strongest.
The bank also highlighted the potential risk of heightened USD selling against EUR this month.
However, despite a lack of any significant data before the month-end fix, Citibank recognised the headline risk to FX from the Jackson Hole symposium being held in the days before.
For more click on FXBUZ
(Richard Pace is a Reuters market analyst. The views expressed are his own)
((Richard.Pace@thomsonreuters.com))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
